Median U.S. home price posts its largest drop since 2021
The worst affected market was Boise, Idaho, where the cost of a home fell 15.4% in the year.
Many home buyers and sellers are continuing to sit on the sidelines as home prices fall and interest rates rise. New listings fell 23.3% from March 2022 to March 2023 because homeowners made the decision to stay in their homes rather than move and face higher interest payments on a new house.
The median U.S. home price fell 3.3% in March this year to $400,528, according to a new report by the real estate brokerage Redfin. This was the largest year-over-year drop since 2012.
Worst hit by the slump in prices were “pandemic boomtowns and pricey Bay Area markets,” the report noted. The worst affected market was Boise, ID, where the cost of a home fell 15.4% in the year. By comparison, home prices there surged 41% in May 2021, and nationally prices rose 26%, stimulated by low mortgage rates, remote work and relatively affordable housing.
Boise has also experienced the worst drop – 79% — in pending sales. But it was not alone. Across the country, pending sales dove 26.6% on a seasonally-adjusted basis to the lowest level since Covid struck.
Real estate agents in Boise believe the collapse of Silicon Valley Bank in California thwarted the beginning of a rebound in sales there. “There are bank failures, inflation, recession fears, mortgage-rate volatility, a war in Ukraine, spy balloons. Some people are wondering if they should pull their money out of the bank and park it in a safe place rather than spend it on a new home,” Redfin agent Shauna Pendleton is quoted as saying.
This cautious attitude persists even though Boise house prices are falling and many sellers – especially homebuilders – are offering concessions. “It is not uncommon for a buyer to get a home for less than the list price,” Pendleton said.
Other towns where home prices took the worst beatings were Austin, TX, and three California cities: Sacramento, San Jose, and Oakland. On the other hand, prices rose more than 10% in March in some cities, including Milwaukee, WI, El Paso, TX, Omaha, NE, Camden, NJ, and Knoxville, TN.
With fewer homes for sale, when one does come up a bidding war may follow. “More than two of every five (44.3%) home offers written by Redfin agents faced competition in March,” the report stated. Buyers’ agents are likely to start contacting listing agents before the home even hits the market.
However, some sellers are delisting their homes when they learn the interest rate on a new home they considered buying may be double their current rate.
“Roughly 55,000 home-purchase agreements were canceled in March, equal to 14.8% of homes that went under contract,” Redfin reported.